Control Copyright ©2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Control 16 1 Describe the basic control process Discuss the various methods that managers can use to maintain control Describe the behaviors, processes, and outcomes that today’s managers are choosing to control in their organizations Learning Outcomes LEARNING OUTCOMES ‹#› Copyright ©2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. MGMT11| CH16 2 Control versus Standards Regulatory process of establishing standards to achieve organizational goals, comparing actual performance against the standards, and taking corrective action when necessary Control Basis of comparison for measuring the extent to which various kinds of organizational performance are satisfactory or unsatisfactory Standards LO 1 ‹#› MGMT11 | CH16 Copyright ©2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3 Setting Standards Standards are determined by: Ensuring whether they enable goal achievement Listening to customer feedback Benchmarking Involves: Identifying the company against which to benchmark those standards Collecting data to determine performance standards of other companies LO 1 ‹#› MGMT11 | CH16 Copyright ©2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 Comparison to Standards and Corrective Action Comparison to standards Quality of comparison between actual performance and actual standards depends on the organization’s measurement and information systems Corrective action Involves identifying performance deviations, analyzing those deviations, and developing and implementing programs to correct them LO 1 ‹#› MGMT11 | CH16 Copyright ©2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5 16.1 Cybernetic Control Process LO 1 ‹#› Copyright ©2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. MGMT11 | CH16 Exhibit 6 Basic Control Mechanisms Gathers information about performance deficiencies after they occur and uses the same information to correct or prevent performance deficiencies Feedback control Gathers information about performance deficiencies as they occur, thereby eliminating or shortening the delay between performance and feedback Concurrent control Monitors performance inputs to minimize performance deficiencies before they occur Feedforward control LO 1 ‹#› MGMT11 | CH16 Copyright ©2019 Cengage Learning. All Rights Reserved. May not be scan ...

1. Control
Copyright ©2019 Cengage Learning. All Rights Reserved. May
not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
Control
16
1
Describe the basic control process
Discuss the various methods that managers can use to maintain
control
Describe the behaviors, processes, and outcomes that today’s
managers are choosing to control in their organizations
Learning Outcomes
LEARNING OUTCOMES
‹#›
Copyright ©2019 Cengage Learning. All Rights Reserved. May
not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
MGMT11| CH16
2
Control versus Standards
Regulatory process of establishing standards to achieve

2. organizational goals, comparing actual performance against the
standards, and taking corrective action when necessary
Control
Basis of comparison for measuring the extent to which various
kinds of organizational performance are satisfactory or
unsatisfactory
Standards
LO 1
‹#›
MGMT11 | CH16
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not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
3
Setting Standards
Standards are determined by:
Ensuring whether they enable goal achievement
Listening to customer feedback
Benchmarking
Involves:
Identifying the company against which to benchmark those
standards
Collecting data to determine performance standards of other
companies
LO 1
‹#›
MGMT11 | CH16
Copyright ©2019 Cengage Learning. All Rights Reserved. May

3. not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
4
Comparison to Standards and Corrective Action
Comparison to standards
Quality of comparison between actual performance and actual
standards depends on the organization’s measurement and
information systems
Corrective action
Involves identifying performance deviations, analyzing those
deviations, and developing and implementing programs to
correct them
LO 1
‹#›
MGMT11 | CH16
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not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
5
16.1 Cybernetic Control Process
LO 1
‹#›
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4. accessible website, in whole or in part.
MGMT11 | CH16
Exhibit
6
Basic Control Mechanisms
Gathers information about performance deficiencies after they
occur and uses the same information to correct or prevent
performance deficiencies
Feedback control
Gathers information about performance deficiencies as they
occur, thereby eliminating or shortening the delay between
performance and feedback
Concurrent control
Monitors performance inputs to minimize performance
deficiencies before they occur
Feedforward control
LO 1
‹#›
MGMT11 | CH16
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accessible website, in whole or in part.
7
Maintaining Control
Control loss: Occurs when behavior and work procedures do not
conform to standards

5. To determine if control is worthwhile, managers must carefully
assess:
Regulation costs: Associated with implementing or maintaining
control
Cybernetic feasibility: Extent to which it is possible to
implement each step in the control process
LO 1
‹#›
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accessible website, in whole or in part.
8
Control Methods
Bureaucratic control
Objective control
Normative control
Concertive control
Self-control
LO 2
‹#›
MGMT11 | CH16
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accessible website, in whole or in part.
9

6. Bureaucratic Control
Use of hierarchical authority to influence employee behavior
Involves rewarding or punishing employees for compliance or
noncompliance with organizational rules, policies, and
procedures
Characteristics
Emphasis on following rules and policies
Higher resistance to change and slower response to competitors
and customers
LO 2
‹#›
MGMT11 | CH16
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accessible website, in whole or in part.
Objective Control
Use of observable measures of worker behavior or outputs to
assess performance and influence behavior
Types
Behavior control: Regulation of behaviors and actions that
workers perform on the job
Output control: Regulation of workers’ results via rewards and
incentives
LO 2
‹#›
MGMT11 | CH16
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7. Normative Control
Regulation of workers’ behavior and decisions through widely
shared organizational values and beliefs
Created in two ways
Hiring based on attitudes and values
Managers and employees learning about what should and
shouldn't be done by observing and listening to stories recited
by experienced personnel
LO 2
‹#›
MGMT11 | CH16
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Concertive Control
Regulation of workers’ behavior and decisions through work
group values and beliefs
Arises when firms assign work groups complete autonomy and
responsibility for task completion
Leads to more stress for workers to conform to expectations
than bureaucratic control
LO 2
‹#›
MGMT11 | CH16
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Self-Control or Self-Management
Managers and workers control their own behavior by:

8. Setting their own goals
Monitoring their own progress
Rewarding or punishing themselves for achieving or for not
achieving their self-set goals
LO 2
‹#›
MGMT11 | CH16
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Balanced Scorecard
Measurement of organizational performance in the following
areas:
Finances
Customers
Internal operations
Innovation and learning
LO 3
‹#›
MGMT11 | CH16
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15
Balanced Scorecard - Advantages
Forces managers to set specific goals and measure performance
in the four areas

9. Minimizes the chances of suboptimization
Suboptimization: Improved performance in one part of an
organization at the expense of decreased performance in another
part
LO 3
‹#›
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16
Controlling Finances
Cash flow analysis
Balance sheets
Income statements
Financial ratios
Budgets
Economic value added (EVA)
LO 3
‹#›
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17

10. Economic Value Added (EVA)
Amount by which company profits (revenues minus expenses
minus taxes) exceed the cost of capital in a given year
Cost of capital shows whether a business, division, department,
profit center, or product is really paying for itself
Makes managers and workers at all levels pay closer attention
to their segment of the business
LO 3
‹#›
MGMT11 | CH16
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Controlling Customer Defections
Customer defections: Performance assessment in which
companies:
Identify which customers are likely to leave
Measure the rate at which customers are leaving
LO 3
‹#›
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19
Controlling Customer Defections (continued)

11. Advantages
Impact on retention of profits
Higher likelihood of receiving honest feedback
Ability to determine who will leave and prevent it from
happening
LO 3
‹#›
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16.5 Advantages and Disadvantages of Different Measures of
Quality
LO 3
‹#›
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Exhibit
21
Innovation and Learning Perspective
Involves:
Continuous improvement in ongoing services and products
Relearning and redesigning creation processes

12. LO 3
‹#›
MGMT11 | CH16
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22
Innovation and Learning Perspective (continued)
Maximizing sustainability
Levels of sustainability - Waste prevention and reduction;
recycle and reuse; waste treatment; and waste disposal
LO 3
‹#›
MGMT11 | CH16
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Key Terms
Control
Standards
Benchmarking
Cybernetic
Feedback control
Concurrent control
Feedforward control
Control loss

13. Regulation costs
Cybernetic feasibility
Bureaucratic control
Objective control
Behavior control
Output control
Normative control
Concertive control
Self-control (self-management)
Balanced scorecard
‹#›
MGMT11 | CH16
‹#›
KEY TERMS
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‹#›
Key Terms (continued)
Suboptimization
Cash flow analysis
Balance sheets
Income statements
Financial ratios

14. Budgets
Zero-based budgeting
Economic value added (EVA)
Customer defections
Value
‹#›
‹#›
KEY TERMS (continued)
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‹#›
MGMT11 | CH16
Summary
Control is achieved when behavior and work procedures
conform to standards and when company goals are accomplished
Managers use five different methods to achieve control in their
organizations
Successful companies find a balance that comes from doing
three or four things right
‹#›
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15. accessible website, in whole or in part.
HIST4 | CH6
‹#›
MGMT11 | CH16
‹#›
SUMMARY
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‹#›
Chapter 16 -
‹#›
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MGMT11 | CH16